You’ve started an eCommerce business and are hoping to find an eCommerce fulfillment company to ship your orders. The truth is that many new business owners don’t realize that the eCommerce fulfillment process involves so much more than just delivering products to customers.
This article will discuss the role that a third-party eCommerce fulfillment provider plays in eCommerce businesses and what you are paying for when you use these services for your business.
What Is Fulfillment?
Before delving into the services third-party fulfillment companies offer, it may be helpful to first understand what fulfillment is.
In essence, fulfillment services involve receiving stock from a supplier, storing it in a warehouse or fulfillment center, and when a customer places an order, the fulfillment company will pick and pack the order and deliver it to the customer.
What Are Third-party Fulfillment Service Providers?
The reality is that eCommerce businesses that provide fast delivery and reliable service thrive in this industry, so the key to reaching your business goals is to focus on your order fulfillment. A great way to do this is by outsourcing the fulfillment to a third party.
These companies, which are known as fulfillment service companies or third-party logistics providers (3PL), specialize in logistics so that they can offer specialized services, faster delivery, custom packaging, returns and exchange processing, and more.
Multiple Fulfillment Center Locations
Many service providers have multiple fulfillment centers that make it much easier to ship your products to your customers.
These eCommerce fulfillment centers are designed to be functional, and they aren’t your typical warehouse. Instead, products are grouped systematically in a way that makes them quick and easy to find when it comes time to fulfill orders.
Some 3PL providers also offer international order fulfillment services thanks to fulfillment centers around the world.
Why You Need Fulfillment Services for Your eCommerce Business
You may be tempted to handle your order fulfillment on your own in the weeks and months after you set up your online store.
While this may be a convenient, cost-effective method for fulfilling orders in the beginning, as your business grows, you will have more orders to ship.
This means that you will likely have to set up your own warehouse and hire staff to manage inventory and ship your orders, which can drastically increase shipping costs, ultimately deterring customers and reducing sales.
On the other hand, if you choose to outsource your order fulfillment to a third party, your overall fulfillment costs will decrease because you won’t need to hire your own warehouse or staff, as fulfillment companies bare these costs. Because they serve so many businesses, they can offer you a competitive rate.
What eCommerce Fulfillment Services Are You Paying for When You Sign Up with a 3PL Provider?
In the section below, we take a closer look at the services that eCommerce fulfillment companies offer.
The Initial Setup
You will need to pay for the initial setup when you first hire a service provider. This is because there are often lots to do to get the fulfillment centers ready to go before they can start shipping your orders, which entails transporting all your products from suppliers to the fulfillment company’s facility.
Your account will also need to be set up, and the service provider’s systems will be integrated with yours. You will then be able to see the orders that have been placed by your customers and ensure that they are delivered as scheduled.
Receiving Costs
Receiving costs, also known as intake fees, are the charges associated with processing the inventory received from shipments. Some companies will bill on an hourly basis for these costs.
Others charge a fixed fee, so you’ll know exactly how much you’ll have to pay upfront. They’ll charge by the quantity or by the product in this situation.
The third-party logistics provider inspects your inventory before it is stored. This includes checking for damage, counting the products, and entering them into an inventory database.
Storage Fees
The cost of storage and handling your inventory is one of the most significant components of fulfillment expenses. Storage facilities have a limited amount of space, so every square inch counts.
To put it another way, when you hire a 3PL, you’ll have to pay for the space your goods occupy in the fulfillment center. You may have to pay more if your products are larger or if you need to store them at several fulfillment centers.
Additionally, if moving inventory to a suitable fulfillment center takes longer or needs specialized equipment, you can expect to spend extra for it.
Packaging
Although your merchandise will be delivered to customers in boxes or other types of packaging, suppliers often package inventory in bulk.
This means your fulfillment company repackages products before sending them to your customers. The pickers and packers will put a number of items into a single box to be shipped to the customer.
Costs for this service will be determined by the package’s weight and size and whether you require standard or custom packaging. The majority of fulfillment companies charge per product.
Custom Packaging and Labels
One of the best ways to ensure that customers remember your brand is by promoting it through custom shipping. Documents are occasionally included in deliveries to customers.
If you’re running a campaign, for example, you could ask your eCommerce fulfillment company to include a pamphlet in each delivery. Deliveries frequently include invoices or receipts as well. You will also have the option of adding gift wrapping and custom labels.
Additionally, many 3PL providers also offer logo design, so you can work with a professional graphic designer to create custom labels to highlight your brand.
However, you should keep in mind that when you choose custom labels and packaging, you can expect to pay an extra fee, and the more extensive and detailed your customizations are, the higher the additional cost will be.
Nevertheless, the benefits that branded packaging can offer your business makes it worth the extra spend!
Labor Costs
Although eCommerce fulfillment companies streamline the fulfillment process, there is still the need for human involvement when it comes to picking and packing orders and shipping them to your customers.
A fulfillment service provider will need to hire staff to man every fulfillment center in their network. Drivers will also need to be hired to deliver your orders.
Then there’s the customer support and administrative tasks that also require staff. These labor costs also form part of your fulfillment service costs.
Shipping Costs
Outbound shipping is one of the major components of eCommerce fulfillment costs. It’s best to go with a fulfillment company that receives a bulk discount from a delivery company and passes those savings on to you.
These costs vary depending on the package’s weight and size and the shipment method used, such as two-day shipping. If you need to ship larger products, such as furniture, you will likely have to pay higher shipping fees as the company will need to use larger vehicles.
Returns Management and Exchange Fees
When a consumer asks for a refund, they send the product to a fulfillment center to be processed. Your service provider will spend time checking the product for damage and restocking it if it’s resaleable.
It will also need to adjust inventory levels if need be. If the item cannot be salvaged, the company will discard it. This means that they may incur disposal costs, which may lead to higher processing costs.
Suppose the item is not discarded. In that case, a standard restocking fee and a return processing fee will apply.
Kitting Services
In order to differentiate themselves from their competitors, eCommerce businesses change things up. They often choose to do things like bundle products. You might want to sell a collection of items under one SKU, or add free items to your orders as part of a sale or promotion.
The charges for assembling these items prior to shipment are referred to as kitting costs. If your orders need kitting, you may be charged an additional fee.
Choosing the Best eCommerce Fulfillment Service Provider
The truth is that order fulfillment is a vital part of every eCommerce business. It is the driving force of your operation, so it is important to choose to offer professional, consistent service to your customers.
In the section below, we offer tips to help you find an eCommerce fulfillment provider perfect for your growing business.
Check Whether the Company Has Experience in Your Niche
Are you selling furniture? You may need a service provider with the inventory storage capacity and the means to transport your goods to your customers.
The reality is that a company that works for you may not work for someone else, so it’s best to consider your business’s specific needs when choosing a 3PL.
One of the best ways to do this is to check whether the fulfillment provider has experience with similar businesses.
Is the Company Upfront About Its Fee Structure?
The reality is that costs can quickly add up when it comes to logistics, so it is essential to find a company that is upfront about its fee structure. Transparent pricing information is a must, so you know exactly what to expect and how much to set aside in your budget for fulfillment services.
Some 3PL providers bill by the shipment, pallet, SKU, or product, while others charge by the hour. Fees such as warehousing and setup fees, as well as shipping charges, may be itemized.
Whatever the case may be, always choose a transparent company to avoid any potential problems.
Integrations
Another commonly neglected factor to consider when choosing a fulfillment service provider is the integrations the potential candidates support.
Even though most service providers offer integrations with several major platforms such as WooCommerce, eBay, and Shopify, this does not ensure that their technology will be optimal for your company.
You should always check to see that the software employed is compatible with your system from start to finish to avoid any technical issues later on.
What Integrations Does Fulfyld Offer?
Fortunately, Fulfyld offers a number of integrations to ensure that you never have any technical difficulties when using our services. Here are some of the integrations we offer:
- WooCommerce
- Shopify
- Shopify Plus
- ShipStation
- Magento2
- eBay
- TradeGecko
- 3D Cart
- Amazon
- BigCommerce
- Walmart Marketplace
- ChannelAdvisor
Insurance Coverage and Backup Plans
Another critical question to ask when choosing a service provider is whether they have insurance coverage if any of your products are damaged or misplaced while in their care.
You will also want to determine the terms of coverage and who will be liable if anything should go wrong.
Additionally, it would help if you also asked what backup plans the company has should something unforeseen, such as a break-in or a natural disaster, should occur. If a company does not have one, this is a red flag!
Packaging Requirements
If you require custom packaging or kitting, you will also need to check whether the 3PL provider has the capacity to cater to your needs. If you are dealing with fragile objects, you will need to have the assurance that the service provider you choose has experience packaging fragile goods.
Suppose you need help developing your brand and designing custom labels and packaging. In that case, you will need to choose a company that offers these services.
How Can You Track Orders and View Inventory Levels?
It would help if you also inquired about the technology that the company uses. Checking the status of orders and being able to access real-time inventory levels is vital for every eCommerce business owner.
Therefore, when selecting a service provider, be sure to inquire about the solutions implemented to decide whether it will offer you the convenience that you’re after.
Some companies also provide detailed reports and analytics. These valuable tools can offer insight into your business’s performance and help you make informed business decisions.
Customer Support
By looking at the customer support structure that a company has in place, you can easily tell whether that company takes its customers seriously or not. Before sealing the deal, always check what customer support is offered.
Do you have to get in touch with a call center every time you have a problem? Will you have a dedicated account manager? Can you get in touch with the team via email or live chat?
Don’t Know Whether Outsourcing Your Order Fulfillment Is the Right Choice?
If you are skeptical about having a third-party logistics company take over your business’s fulfillment process, you are not alone.
Many small business owners wonder whether hiring a 3PL is feasible. However, the reality is that the only way to thrive in the industry is to offer consistent, reliable service to your customers.
At Fulfyld, we offer personalized service and upfront costs, so you are never in the dark. When you sign up with Fulfyld, you will receive a dedicated account manager to handle your account, so if you have any questions, you can contact him or her directly, without having to explain your problem to several different customer support operators before finally receiving assistance.
Our packages are affordable, and there are a number of options for you to choose from, so you can find a method that works best for you. Need to find out more about the services we have to offer? Get in touch with us today for a free, no-obligation quote!
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